Distribution a Problem in Indonesian Gas Sector, VP Says

Nusa Dua, Bali/Jakarta. A lack of distribution infrastructure is crippling Indonesia’s ability to utilize its enormous reserves of gas, Vice President Boediono said on Wednesday.

Indonesia has proven natural gas reserves amounting to 109 trillion cubic feet, the most in the Asia-Pacific region, a report last year from British oil giant BP said.

But often gas distribution is haphazard, forcing some corporate customers to suspend operations at their plants. State-controlled utility Perusahaan Listrik Negara, which uses the gas to produce electricity, struggles to secure an adequate supply.

He said the government is backing a project to build gas pipelines linking Java and Sumatra. The pipeline is expected to function from 2014. Also being planned are a pipeline linking Java with Kalimantan, and another linking the Central Java city of Semarang with the East Java manufacturing city of Gresik.

Several regions are also building gas receiving and regasification facilities, Boediono said, referring to equipment that allows LPG that has been turned solid for transport from its source location to be prepared for use.

Another constraint on LPG consumption is pricing, the vice president said, with local buyers seeking natural gas cheaper than global market prices.

Boedono said the government was helping producers to sell the gas nearer to international benchmarks.

But one energy analyst was dismissive of the vice president’s words, saying the government was inconsistent in its gas policy. “This is the same old story. When it come to price, government always backtracks on its policy,” said Pri Agung Rakhmanto, executive director of energy think-tank Reforminer Institute.

He said this led to Indonesia lagging other countries in the development of gas resources.

Karen Agustiawan, the president director of Pertamina, said the state energy company was involved in a program to convert devices from using kerosene to using LPG. The company has distributed three-kilogram LPG canisters to 57.9 million household since the program begun in 2007.

To meet rising demand for LPG, Pertamina has stepped up its LPG storage capacity, she said.

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